Pension savers cash in as they take £7bn from funds

PENSION savers have cashed in more than £7.6 billion from their pots since the retirement freedoms were introduced last year, figures show.

Launched in April 2015, people aged 55 have been able to access their pension savings as they wish, subject to their marginal rate of income tax, rather than being required to buy a retirement annuity.

HM Revenue and Customs (HMRC) figures show the total amount of money withdrawn from pensions since April 2015 has reached £7.65bn, with over 1.1 million payments having been made.

The Treasury said the free, impartial Pension Wise guidance service, which helps people decide how to use the freedoms, has already had more than three million visits to the website and nearly 90,000 appointments to date.

Stephen Lowe, group communications director at Just Retirement, said people should be wary of triggering an unexpected tax bill when accessing their pension pot.

He said: “It appears we have reached a steady level of people exercising their pension freedoms to take on average £10,000 out of their pension pots.

“That is enough to push someone on basic state pension into the next tax band, and almost certainly is for those who are still working.”

Simon Kirby, Economic Secretary to the Treasury, said: “Today’s figures prove that allowing people to do what they want with their hard-earned savings, whether it’s buying an annuity or taking a cash lump sum, is the right thing to do.

“The freedoms remain a popular choice as people consider the different ways to fund their retirement.”